MO: Cyber Monday sparks Internet tax debate

ONLINE TAXES: One estimate said Missouri could reap $500 million if it collected sales tax on all purchases made online by state residents.

By Johnny Kampis | Missouri Watchdog

ST. LOUIS – Online retailers like Amazon were expected to reap millions during the Christmas shopping event known as Cyber Monday, but Missouri’s coffers won’t benefit because the state doesn’t collect sales tax from Internet-only stores.

The Show Me State faces the same conundrum as the rest of the nation — how to make “remote sellers,” or those who sell to Missouri residents but who do not have a physical presence in the state, pay sales taxes on the goods they sell.

“We’re concerned that everybody plays by the same rules,” he said. “There’s been some pretty big estimates that Missouri could see a windfall of $400 million to $500 million in revenue that would be spread throughout the state and local governments.”

But Missouri has not passed corresponding legislation; a bill was introduced into the General Assembly last year but failed to pass.

“Congress truly has to act on this,” Overfelt told Missouri Watchdog. “All a state can do is try to make it simpler for companies who operate across state lines to pay their sales taxes.”

The governing board of the Streamlined Sales Tax group notes that a U.S. Supreme Court ruling in the 1992 case Quill v. North Dakota gives Congress the power to level the playing field for local merchants under the Commerce Clause.

The group said that 1,400 retailers have voluntarily collected more than $700 million in sales taxes in states that have passed the streamlined legislation, but that states could be missing out on more than $23 billion in uncollected sales tax from businesses that aren’t participating.

Amy Blouin, executive director of the Missouri Budget Project, said the growth in remote sales could put extra burden on state and local government services, which rely heavily on sales tax collections for their budgets.

Overfelt said he’s heard rumblings that if Missouri could collect online sales taxes there might be interest in reducing the state’s overall rate.

“We certainly wouldn’t be opposed to that,” he said.

There’s been pushback from some online merchants on the Internet sales tax issue.

Top online auction house eBay, where tens (if not hundreds) of thousands of small merchants make a living selling their wares, released a video post-election arguing against requiring its users to pay sales taxes except to customers they serve within their own states.

Johnny Kampis is a content editor at Watchdog.org, and is helping to start the organization’s Alabama Watchdog bureau in his home state. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com and Atlanta Journal-Constitution.